A house is purchased for $391,000 with a 10% down payment. A mortgage is secured at 5% for 20 years. Find the monthly payment.
A) $2554.62
B) $2322.38
C) $2786.86
D) $2090.14

Question

Quizplus · Accepted Answer

The down payment is 10% of $391,000, which is $39,100. The loan amount is $391,000 - $39,100 = $351,900. Using the formula for monthly mortgage payments, M = P[r(1+r)^n]/[(1+r)^n – 1], where P is the loan amount, r is the monthly interest rate (5% annual rate / 12 months = 0.0041667), and n is the number of payments (20 years * 12 months = 240), the monthly payment is approximately $2322.38.

A House Is Purchased for $391,000 with a 10% Down